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When you first sign up for a Twitter account, you get the chance to upload a profile picture (which Twitter calls "avatar"), but you don't have to. Until you add an avatar, Twitter will show an egg over a variable background color, as shown on the screenshot. I'll show you how to add, or change, your profile picture.
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Here are the best dimensions and format to use: regardless of the image format used in the picture or logo you upload (JPG, GIF, ...), Twitter will convert it to a PNG file. So it's best to directly upload a PNG photo to avoid problem during the conversion. The image you upload will become a square, so it's best to use a square image to begin with. Since the picture everyone sees is 200 by 200 pixels, that's a good dimension to use! 400 by 400 pixels is even better.
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Right after you log into your Twitter account, you're redirected to the correct page - your "homepage", so to speak. From any other page on twitter.com, click on your avatar / the egg icon, and select "View profile" from the dropdown.
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Once on your own Twitter feed, click on the Edit profile button on the right, right below your header photo. As soon as you do, your profile picture shows a camera icon with a plus sign, and the words "Add a profile photo". Click anywhere inside that picture, and select "Upload photo" in the menu. (Adding a header picture works the same way, but with different dimensions.)
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Pick an image from your computer: Twitter automatically uploads it in the background, and shows a very basic graphic editor that lets you resize (crop, really), the portion of the photo you want to use as avatar. If you uploaded a 200 or 400 pixel square image, as mentioned earlier, the size is ready to go: click Apply to proceed. Within seconds, Twitter will show a "Your photo was published successfully" confirmation message. Click Save changes on the right, and the page updates itself to show your new avatar - you are done!